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October 3, 2016

Washington Health Policy Week in Review Archive f51fea06-4214-437f-94c6-e9a4a46b4708

Newsletter Article


Influential Panel Eyes Medicare Drug Payment Recommendations

By Kerry Young, CQ Roll Call

September 29, 2016 -- An influential panel of congressional advisers intends to develop a package of targeted recommendations to address Medicare's rising drug costs, with an aim of helping lawmakers in their struggles to address the nation's pharmacy bills.

"By the spring, we will come out with some formal recommendations, hopefully about the time that Congress is ready to take on some of these difficult issues," Medicare Payment Advisory Commission (MedPAC) Chairman Francis J. Crosson said Thursday at a conference sponsored by CAPG, a group that advises physicians.

Members of Congress are facing increasing pressure to act on rising drug prices that strain many family budgets, as seen most notably in the recent outrage about Mylan N.V. charging $600 for a two-shot package of the EpiPen rescue drug for severe allergic reactions. Spending on medicines in the United States rose by 8.5 percent last year to $309.5 billion from the previous year, according to consulting firm IMS Health.

Thursday brought a fresh flurry of news on drug costs. Democratic presidential candidate Hillary Clinton called for steps in rein in drug prices in an article in the New England Journal of Medicine. Health and Human Services Secretary Sylvia Mathews Burwell echoed Clinton in calling for allowing the federal government to negotiate prices for certain drugs at an event hosted by the Atlantic, according to press reports.

Also on Thursday, the Kaiser Family Foundation released a report showing strong support in the American public for federal action on drug prices. About eight in 10 Americans surveyed favor allowing the government to negotiate with drug companies to lower the prices of medicines for people on Medicare, the nonprofit group said. Their polling also indicates that about two-thirds of people would support the creation of an independent group that oversees the pricing of prescription drugs.

Clinton supports this approach. In the New England Journal article, she called for a new federal "consumer response team charged with identifying excessive price spikes in long-standing, life-saving treatments." The New England Journal of Medicine said Republican presidential candidate Donald J. Trump didn't respond to its request for his comments on health policy.

'Flak Jacket'

MedPAC's recommendations likely will be closely watched in discussions about drug pricing, especially if the panel can suggest potential savings. Lawmakers in recent years have several times turn to Medicare as a source of offsets for other legislation. Last year's budget deal (PL 114-74), for example, included about $9.3 billion in savings over a decade from a change in payments for certain services delivered by doctors' offices owned by hospitals. MedPAC had long supported this shift, which addresses cases in which Medicare paid more for identical services if they are performed in a doctor's office owned by a hospital than if delivered in an independent physician practice.

Often, the panel's recommendations can serve as a "flak jacket" for lawmakers as they move to reduce Medicare payments to politically powerful segments of the heath care industry, Dan Mendelson, president of Avalere Health, told CQ earlier this year.

MedPAC in June offered suggestions to Congress on steps to rein in the rising cost of Medicare's Part D pharmacy plans, which last year spent about $90 billion last year. MedPAC said a combination of steps that might save about $10 billion over a decade. These include allowing the insurers who run Part D to narrow the number of antidepressants and drugs to prevent transplant rejection they cover. MedPAC also recommended scaling back a financial safety-net for insurers when their customers have higher-than-expected pharmacy bills, arguing that it would increase the incentive to negotiate lower prices.

MedPAC will delve into deliberations for further recommendations at a meeting next week, Crosson said. These discussions likely will continue over the next several months. Possible topics include payment for drugs covered by Medicare's Part B outpatient program, which handles bills for services provided in doctors' offices, he said.

Medicare officials separately already have put forward a proposal for a five-year test of alternative Part B payments for drugs, angering the pharmaceutical industry and doctors' groups. Medicare pays more than $20 billion a year for Part B drugs. Medicare has not said when it will release a final version of the Part B payment test, which it first unveiled in March, but lobbyists speculate that its publication could come soon.

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Governors' Races Could Affect Health Care Policy

By Marissa Evans, CQ Roll Call

September 30, 2016 -- As voters prepare to cast their ballot for the presidential election, in a few states the race for governor also could have major impacts on what's next for health care, especially for Medicaid expansion.

There are 12 gubernatorial races this election cycle, but only a modest number have a chance to flip parties, said Leighton Ku, a professor of health policy and management at the George Washington University Milken Institute School of Public Health.

The outcome of the presidential election also will affect what states can do in implementing the federal health law. Democratic nominee Hillary Clinton reiterated Wednesday in the New England Journal of Medicine that one of her top health care priorities is convincing governors in the 19 states that have not yet expanded eligibility for Medicaid, the federal-state program for the low-income, to do so. Republican presidential nominee Donald Trump has called for repealing the health law that allows states to broaden Medicaid eligibility and supports converting Medicaid from an entitlement program to a block grant program.

"The bigger question, particularly in situations where parties may change, may have to do with what happens at the national level," Ku said in an interview. "If Republicans do win the national election there could be big changes to the [federal health law]... States in all likelihood would face choices that are not currently available to them."

Voters in Delaware, Indiana, Missouri, Montana, New Hampshire, North Carolina, North Dakota, Oregon, Utah,Vermont, Washington, and West Virginia are considering gubernatorial candidates this election cycle.

Ku points to North Carolina's governor's race as one of the most important this election season. Republican Gov. Pat McCrory, the incumbent, is up against Roy Cooper, the Democratic challenger. McCrory has been embattled in the aftermath of signing off on the state legislature's so-called bathroom bill, which would have limited civil protections for transgender people and affect which restrooms they could use. He's also faced criticism over how he floated differing positions on Medicaid expansion during his term. Ku said since the state is considered to have more moderate voting patterns, it's a toss-up. "Who knows how it's going to go?" he said.

Medicaid expansion plans are something the gubernatorial candidates have had to weigh if they are running in one of the 19 states that did not expand eligibility. Under expansion, the federal health law allows states to expand Medicaid to individuals with incomes up to 138 percent of the poverty level. Starting in 2017, states will have to start chipping in 5 percent of the costs and by 2020, 10 percent of costs. Thirty-one states and the District of Columbia have taken up expansion.

Matt Salo, executive director for the National Association of State Medicaid Directors, said in an interview that for Medicaid expansion efforts in the last remaining states, the real question is what a governor may do on his or her own, such as through executive authority. Some may be willing to keep inherited expansion programs while others may block expansion. Salo points to examples in Louisiana, Kentucky, and Virginia, where new governors coming in under a party flip made decisions about Medicaid in complete opposition to their predecessors.

Louisiana Gov. John Bel Edwards, a Democrat, used his first executive order to expand the state's Medicaid program in July, while Virginia Gov. Terry McAuliffe has tried three times to convince his Republican legislature to open up eligibility, to no avail. Meanwhile, Kentucky Gov. Matt Bevin, a Republican, had said on the campaign trail he would dismantle the Medicaid expansion but walked back those comments so his administration could apply for a federal waiver that would change how the program works.

"[Bevin] wasn't a traditional Republican governor," Salo said. "He was really willing to shake some foundations and rattle some cages."

In the Utah gubernatorial race, incumbent GOP Gov. Gary R. Herbert continues to push for Medicaid expansion, which his Republican colleagues in the legislature have blocked so far. His Democratic opponent Mike Weinholtz says Herbert should do more to promote expansion.

As Vermont Gov. Peter Shumlin prepares to leave office, the Green Mountain State's gubernatorial race is also one to watch, said Trish Riley, executive director of the National Academy for State Health Policy, in an interview. Democrat Sue Minter and Republican Phil Scott are facing off in November.

Minter is aiming to take up Shumlin's efforts to implement universal health care in the state and improve the Vermont Health Connector, the state health insurance exchange website. Meanwhile, Scott says he, too, wants to fix the exchange website and further tackle the state's ongoing opioid abuse epidemic, including creating an Opioid Coordination Council to help oversee state agency efforts and programs related to helping provide services.

Vermont is "a little state but it's a laboratory nonetheless and that kind of activity is important," Riley said. "They have been leaders on so many fronts."

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GAO: HHS Can't Prioritize Payments to Insurers over Treasury

By Erin Mershon, CQ Roll Call

September 29, 2016 -- A nonpartisan government watchdog concluded that the Obama administration erred in administering a program in the 2010 health law intended to pay both insurers and the Treasury Department by prioritizing insurance companies first.

The legal analysis, released Thursday by Republicans in both chambers that requested it, concluded that the administration acted without proper authority in distributing so-called reinsurance payments, which are designed to redistribute payments from plans that enroll healthier individuals to those that enroll sicker customers.

Under the law, the Department of Health and Human Services (HHS) was supposed to bring in $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. Insurers would get back $10 billion, $6 billion, and $4 billion in each of those years respectively, with the rest going to the Treasury Department to help fund the health law. But HHS brought in fewer funds than it expected in both 2014 and 2015, and prioritized its payments to insurers. So far, Treasury has received about $500 million.

HHS "lacks authority to ignore the statute's directive," GAO wrote in the legal opinion. "The agency is not authorized to prioritize collections in this manner.  . . .  [It] is required to collect and deposit amounts for the Treasury, regardless of whether its collections fall short of the amounts specified in statute for reinsurance payments."

Republicans in Congress have hammered the Obama administration over the payments for months, including in a series of hearings this summer and fall. Sens. Mike Enzi, R-Wyo.; Lamar Alexander, R-Tenn.; Orrin Hatch, R-Utah; John Barrasso, R-Wyo.; and Reps. Fred Upton, R-Mich.; Kevin Brady, R-Texas; and Tom Price, R-Ga.; requested the analysis. They chair the committees with jurisdiction over health and budget issues.

Sen. Ben Sasse, R-Neb., has also introduced legislation that would slash the HHS budget in half if the agency doesn't pay the Treasury Department what it is due.

"GAO's new legal opinion is simple: the law is the law and HHS broke it," Sasse said in a release. "Washington has been running a textbook, crony scheme: cutting checks to big insurance companies that can afford lobbyists instead of giving taxpayers the $5 billion they're owed."

The administration, for its part, has said that it provided proper notice of how it planned to distribute the payments and received no comments, from lawmakers or others, suggesting it lacked the authority.

The reinsurance program, which will sunset this year, is funded by all health insurance companies, including those sold off the exchange and self-insured plans.

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Little Consensus on Obamacare Fixes as More Plans Drop Out

By Erin Mershon, CQ Roll Call

September 26, 2016 -- At the top of Anthem Inc.'s wish list, when it comes to potential changes aimed at shoring up the struggling health marketplaces, is improving the risk adjustment formula. And tightening special enrollment periods. And extending the moratorium on the so-called health insurer fee.

Elizabeth Hall, the insurer's vice president for federal affairs, struggled to choose just one top priority at a Monday congressional briefing by the Alliance for Health Reform. The forum was centered on the ongoing issues with affordability, competition, and choice on the individual market exchanges established by the health law.

The law has been besieged by a series of negative reports this fall. Major insurance companies like UnitedHealth Group Inc. and Aetna Inc. announced mass exits from many of the marketplaces in which they were participating, citing sizable financial losses. Those that remain are requesting double digit premium increases to make up their own shortfalls.

On Monday, Blue Cross and Blue Shield of Tennessee—the largest insurer in the state's individual market by far—announced that it would not offer plans next year in major cities like Nashville and Memphis. On Friday, Blue Cross and Blue Shield of Nebraska announced it wouldn't participate in the state at all in 2017. Both blamed the withdrawals on millions in losses.

"We're very much in a transition period," Hall said. "It's been a longer transition period than I think the law had laid out and than we all had expected."

Political operatives, academics, lobbyists, and others have offered a broad spectrum of policy proposals aimed at strengthening the marketplaces, ranging from controversial, partisan policies like a public insurance option or a full repeal to smaller, granular tweaks that some say will have better prospects in a divided government. But nearly all experts remain divided on which are feasible or which to prioritize.

At Monday's briefing, Hall joined Peter Lee, the executive director for Covered California; Chris Holt, director of health care policy for the American Action Forum; and Sabrina Corlette, senior research development at Georgetown University's Health Policy Institute.

The only potential "fix" that earned significant praise from a majority of the panel concerned risk adjustment, one of the so-called premium stabilization programs included in the health law. Hall, Lee and Corlette all praised the regulatory fixes the administration proposed in a recent rulemaking process.

Otherwise, the panelists proposed a grab bag of policies—and often disagreed with one another. Corlette took aim at Hall's insistence on tightening special enrollment periods. She noted that there was little to suggest that people signing up during the periods needed more care than others and argued that, to the contrary, they might improve the risk pools. Corlette and Lee also suggested that investing more in outreach and marketing would help attract the young, healthy people needed to improve the risk pools and keep premiums low.

Holt, meanwhile, emphasized a conservative idea to loosen the so-called age rating bands that restrict how much health insurers can charge individuals of different ages. He said that some Democratic health economists and Democratic hill aides, had expressed some support for the ide in private conversations. However, Democratic lawmakers blasted the idea almost universally in a June Energy and Commerce Committee hearing that touched on the issue.

None of the panelists thought that one potential fix—combining the individual markets that exist both on and off the exchanges—would have any impact on the exchanges, since the risk between the two is already pooled.

Reaction to Blue Cross Plans' Announcements

Some of the changes under discussion could convince insurers who have left the marketplaces to return. Blue Cross Blue Shield (BCBS) of Nebraska officials said Friday that the company would continue to work with officials to consider returning to the exchange next year. And BCBS of Tennessee said it was monitoring to consider a possible return "if conditions permit."

Still, the withdrawals drew quick political ire. Sen. Lamar Alexander, R-Tenn., who helms the Health, Education, Labor and Pensions Committee, blasted the 2010 law following the Tennessee announcement and called again to repeal the law.

"This is more evidence that Obamacare is falling apart," he said in a statement. "Short term, we need to give families the opportunity to use their Obamacare subsidies to buy a policy for 2017 outside of the exchange."

Nebraska Sen. Ben Sasse had a similar reaction Friday. "Enough is enough," he said.

The Tennessee insurer called the decision "difficult but necessary" in a statement.

"Beyond closing the gap between rates and medical costs, we continue to have concerns about uncertainties with the ACA at the federal level that could lead to future losses," the company said in a statement. "As a result, we've made this decision to scale back in an effort to limit the risk of losses and protect the financial security our more than 3 million members rely on."

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HHS Aims to Attract Young Adults with Mobile Improvements

By Erin Mershon, CQ Roll Call

September 27, 2016 -- Health and Human Services Sylvia Mathews Burwell found her inner millennial for a Tuesday event on the administration's efforts to attract young, healthy people to the exchanges.

She dropped references to the mobile phone game Pokemon Go and talked up the agency's newly minted hashtag, #HealthyAdulting. Her showstopper: a name-dropping of the celebrities Tom Hiddleston and Taylor Swift, as well as the popular new Netflix series Stranger Things.

Referring to "those kids from Stranger Things or HiddleSwift," she said, "I should emphasize that it is important stay covered whether you're starting a new celebrity couple or planning a trip to the upside down."

Burwell's hip references came as HHS announced a new campaign aimed at targeting the so-called Young Invincibles—healthy young adults who still make up a huge chunk of the remaining uninsured—and whose modest spending on medical care could help shore up the struggling health insurance exchanges set up under the health law.

Insurance companies and administration officials see signing up more young people as a chief priority that could restrain health costs in the exchanges, which would improve the financial outlook for participating insurers and potentially keep premiums lower. Affordability remains a major challenge for the plans sold on the exchanges.

The administration's new campaign will partner with the online gaming website Twitch, which attracts about 10 million daily users. The site will feature videos and home page ads, and Burwell suggested other such partnerships are also in the works.

HHS also is working to improve the mobile experience and will roll out a new way to compare plans on phones and tablets. There will be "no more clicking on tiny boxes or zooming in on tiny text," Burwell said.

Burwell said the agency would continue to make announcements about the coming open enrollment period, which begins Nov. 1, throughout the fall.

Education Secretary John King also announced a challenge for college campuses that would reward those who joined the effort to insure students and explain the options available to young people. The agency is holding a contest for a trip to the White House for the team of people at one of the colleges that participates.

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Medicaid Programs Balance Legal Challenges and High Drug Prices

By Marissa Evans, CQ Roll Call

September 27, 2016 -- Medicaid programs are facing legal pressure to allow beneficiaries with deadly hepatitis C to have access to high-priced specialty drugs, but the costs could wreak havoc on state budgets.

Colorado recently became the latest state to face legal action. The American Civil Liberties Union's (ACLU) 26-page lawsuit filed on Sept. 19 through the U.S. District Court in Colorado calls on the courts to force the state to fully fund Medicaid beneficiaries' hepatitis C drugs without restrictions.

ACLU lawyers wrote in the lawsuit that the state's limited coverage of specialty drugs was illegal according to the guidelines of the joint federal-state health insurance program for the poor and disabled. The restrictions, they said, "forces stricken individuals to wait for treatment until they have suffered measurable, and potentially irreparable and irreversible liver damage."

Medicaid enrollees in Colorado are "being unduly subjected to a second-class standard of health insurance coverage for the sole reason they are poor," ACLU officials wrote in the Colorado lawsuit.

Colorado is one of many states grappling with how to pay for expensive specialty drugs without breaking their Medicaid budgets. While drugs like Harvoni and Sovaldi have been lauded as lifesavers for patients living with hepatitis C, states have been alarmed at the $84,000 and $94,500 price tag for the respective treatments. Medicaid programs across the U.S. last year were only able to treat 700,000 enrollees infected with hepatitis C—or 2.4 percent of affected beneficiaries, according to a Senate Finance Committee report released Dec. 1.

Some states have turned to special restrictions for Medicaid beneficiaries' access to the hepatitis C drugs. States have implemented various roadblocks including limiting treatment to beneficiaries with severe liver damage, requiring patients to abstain from drug and alcohol abuse and requiring specialty providers to prescribe the drugs.

Trish Riley, executive director for the National Academy for State Health Policy, said in an interview that the lawsuits are "the perfect storm" of what could happen with states battling limited budgets with high drug prices. 

"States can't afford to do this," Riley said. "We have to figure out are there other ways to reduce the costs of these drugs and the majority of states are limiting access but these court cases will obviously have them all at attention."

The ACLU lawsuit pointed to similar pressures in Delaware, Florida, Massachusetts, and New York that caused the states to reverse course on drug restrictions.

Washington state Medicaid enrollees living with hepatitis C saw relief from the courts after a federal judge instituted a preliminary injunction on May 27 ordering the Washington Health Care Authority to start providing the drugs without any restrictions based on severity of the disease. The state's appeal was denied on Sept. 13. Last week, the agency posted the court ruling on its website, saying that if patients "have been denied new drugs to treat hepatitis C or have not tried to get the new drugs, you may want to consult with your doctor."

The federal Centers for Medicare and Medicaid Services (CMS) wrote in a Nov. 5 guidance that they were concerned about the restrictions and that states should "examine their drug benefits to ensure that limitations do not unreasonably restrict coverage of effective treatment." The agency pointed to pharmacy and therapeutics committees and drug utilization review boards as potential alternatives to restrictions.

"The effect of such limitations should not result in the denial of access to effective, clinically appropriate, and medically necessary treatments," CMS said in the guidance of the restrictions.

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